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TMI Blog2018 (3) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... d for reviewing the decision taken by the AO u/s 143(3) of the Act. There is a demarcation and separation of jurisdiction even for revision for an order suffering from error and therefore the remedy for such erroneous order is provided u/s 263 of the Act. Hence, the reopening of the assessment is set aside - Decided in favour of assessee. - ITA No. 1004/JP/2017 - - - Dated:- 29-1-2018 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri Rajendra Agarwal (CA) For The Revenue : Shri Ajay Malik (Add l CIT) ORDER PER: VIJAY PAL RAO, JM This appeal by the assessee is directed against the order of Ld. CIT (A)-22, Alwar dated 03/10/2017 pertaining to the Assessment Year 2010-11. The Assessee has raised the following grounds of this appeal:- On the facts and circumstances of the case, the Ld. CIT(A) has erred in confirming:- 1. Re-opening of assessment u/s 147 of the Income Tax Act, 1961. 2. Not communicating the reasons recorded u/s 148(2) of the Income Tax Act, 1961 and cutting the right of the assessee to file the objections before the Ld. AO. 3. Disallowing exemption of ₹ 12,34,179/- claimed u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al already available on record at the time of scrutiny assessment. Therefore, the reopening is not valid and liable to be set aside. In support of his contention he has relied upon the decision of Hon ble Jurisdictional High Court in case of CIT vs. Hindustan Zinc Ltd. 393 ITR 264. 4. On the other hand, Ld. D/R has relied upon the orders of the Authorities below and submitted that the Assessing Officer after completion of assessment u/s 143(3) has noticed this fact that the assessee has not applied the income in respect of the Educational Institution namely Sir Chhotu Ram Training Institute and therefore the surplus which is more than the permissible limit of 15% is liable to be taxed. 5. We have considered the rival contentions as well as the material available on record. The assessee trust is running an Educational Institutions and the objects and activities of the assessee trust were accepted as charitable in nature while granted registration u/s 12AA of the Act vide order dated 04.11.2004. For the year under consideration the assessee filed return of income on 15.10.2010 and declared nil income after claiming the benefit of Section 11 of the Act. The Assessing Officer w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eopening as surplus income of ₹ 12,34,179/- pertaining to other institutions namely Sir Chhotu Ram Training Institute, Bharatpur . The AO has not disputed the aggregate total annual receipt of ₹ 36,05,243/- and the total expenditure incurred by the assessee during the year of ₹ 32,99,012/-. However, the reopening is based on the ground that the assessee has not applied income to the extent of ₹ 12,34,179/- pertaining to Sir Chhotu Ram Training Institute in respect of the charitable activities of the said institution. However, the Assessing Officer has not disputed the total expenditure incurred by the assessee of ₹ 32,99,012/-. Accordingly, it is manifest from the record that the reopening is based on reappreciation of the facts, materials and details available on the record at the time of assessment framed u/s 143(3) and therefore the AO has formed the believe only on the basis of the changed of opinion by re-appreciation of the material already on record. It is also not in dispute that after completion of assessment u/s 143(3) nothing new has come to the knowledge of the Assessing Officer and therefore the reassessment proceedings initiated by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , or (ii) omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year. Both these conditions are conditions precedent to be satisfied before the Income-tax Officer could have jurisdiction to issue a notice for the assessment or reassessment beyond the period of four years, but within the period of eight years, from the end of the year in question.' The Hon'ble Supreme court further observed that it is duty of every assessee to disclose fully and truly all material facts necessary for his assessment. But, his duty does not extend beyond this. The Hon'ble Supreme Court opined that once all primary facts are before the Assessing Authority, he requires no further assistance by way of disclosure . It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. 7. In the matter of S. Narayanappa and Others v. Commissioner of Income Tax, Bangalore [1967] 63 ITR 219, the Hon'ble Supreme Court while relying upon the decision in the matter of Calcutta Discount Co. Ltd. (supra), has observed as under : 'But the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad to the formation of the belief contemplated by section 147 (a) of the Act must have a material bearing on the question of escapement of income of the assessee from assessment because of his failure or omission to disclose fully and truly all material facts. Once there exist reasonable grounds for the Income-tax Officer to form the above belief, that would be sufficient to clothe him with jurisdiction to issue notice. Whether the grounds are adequate or not is not a matter for the court to investigate. The sufficiency of the grounds which induce the Income-tax Officer to act is, therefore, not a justiciable issue. It is, of course, open to the assessee to contend that the Income-tax Officer did not hold the belief that there had been such non-disclosure. The existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. The expression reason to believe does not mean a purely subjective satisfaction on the part of the Incometax Officer. The reason must be held in good faith. It cannot be merely a pretense. It is open to the court to examine whether the reasons for the formation of the belief have a rational connection with or a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could reasonably entertain the belief, the conclusion would be inescapable that the Income Tax Officer could not have reason to believe that any such escapement was by reason of the assessee had escaped assessment and such escapement was by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts and the notice issued by him would be liable to be struck down as invalid. (Emphasis Supplied) 10. In the matter of Sri Krishna (P.) Ltd. v. ITO [1996] 221 ITR 538/87 Taxman 315, the Hon'ble Supreme Court has observed as under : The Income-tax Officer can issue notice under section 148 of the Income-tax Act,1961, proposing to reopen an assessment only where he has reason to believe that on account of either the omission or failure on the part of the assessee to file the return or on account of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year, income has escaped assessment. The existence of the reason(s) to believe is inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to the Assessing Officer to reopen assessments on the basis of 'mere change of opinion', which cannot be per se reason to reopen. One must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to reassess, but the reassessment has to be based on fulfilment of certain pre-conditions and if the concept of 'change of opinion' is removed as contended on behalf of the department, then in the garb of reopening the assessment, review would take place. One must treat the concept of 'change of opinion' as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1-4-1989, the Assessing Officer has power to reopen, provided there is 'tangible material' to come to conclusion that there is escapement of income from assessment. Under the Direct Tax Laws (Amendment) Act, 1987, the Parliament not only deleted the words 'reason to believe', the Parliament reintroduced the said expression and deleted the word 'opinion' on the ground that it would vest arbitrary powers in the Assessing Officer. (Emphasis Supplied) 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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